Basically, a title loan is a type of short-term loan that comes with a higher rate of interest˳ This requires that you present your car as collateral˳ So, if you don’t enjoy an impressive credit rating but you still want to take a loan, we suggest that you consider a title loan˳ In this article, we are going to introduce you to this concept˳ Read on to find out more˳
What Is a Title Loan?
First of all, this type of loan allows you to pledge your vehicle as collateral˳ If you don’t pay back the loan on time, the lender may take your car from you˳ Typically, these loans are short-term and require you to pay a higher amount of interest˳
So, if you have a poor credit rating, you still have a great opportunity to qualify for the loan˳ Most lenders won’t even consider your credit rating and history˳
How Does it Work?
First of all, you need to find a lender that offers title loans˳ As long as you have a vehicle that is registered in your name, you may be eligible for this service˳ Before submitting your application, your lender may need to see your car, your license, and proof of ownership˳
As soon as your application is approved, you will receive the loan money by handing over your car title˳ Although the loan terms will be determined by the lender, most title loans feature 30 days of terms˳
In other words, once the loan period comes to an end, you will pay back one lumpsum payment˳ You will pay back the principal amount plus all of the fees and interest˳ Most of these lenders charge a fee of 25% per month of the loan amount˳
This is the reason title loans are not suitable for everyone˳ If you fail to pay your loan on time, know that you will lose access to your car˳ Therefore, if you want to take out this type of loan, just make sure that you will be able to make payments on time˳ After all, you don’t want to risk losing access to your favorite car˳
The Maximum Loan Amount
As far as your loan limit is concerned, it will be between 25% and 55% of the price of your vehicle˳ The lender will take a closer look at your car to get an estimate of its value˳ The loan amount maybe $10,000 or more˳ In most case, it’s under $10,00 but some people borrow more to meet their needs˳
According to the reports released by the Consumer Financial Protection Bureau, 1 out of 5 title loan borrowers fails to pay their loans back and lose access to their vehicles˳ Usually, they take out more loans in order to cover their previous loans˳
Long story short, this was an introduction to title loans˳ If you want to take out this type of loan, we suggest that you consider the information given in this article˳ This will help you make an informed decision˳
Source by https://ezinearticles˳com/?Title-Loans:-How-Do-They-Work?&id=10491426
